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Monday, April 19, 2021

Former Goldman Sachs executive admits to defrauding investors

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A former senior vice president of Goldman Sachs & Co. pleaded guilty on Thursday to defrauding investors out of millions of dollars in an alleged investment scheme that pumped hundreds of millions of dollars of toxic home loans into securities that misled investors and the public.

Karen Mack pleaded guilty to conspiracy to commit securities fraud, money laundering and wire fraud. Her attorney said that she would be making a deal with the U.S. Attorney’s Office that would result in no prison time.

She has agreed to cooperate with federal prosecutors in the matter.

Ms. Mack pleaded guilty to a raft of fraud schemes that prosecutors say allowed her to take millions of dollars from funds associated with two institutions, the investment bank Lehman Brothers and the health care insurance company Wellpoint. The two companies are known as guarantors.

The U.S. Attorney’s Office in Massachusetts said Ms. Mack was responsible for transferring more than $43 million of unlawful funds to traders at Goldman Sachs.

“Karen Mack represented to investors that Lehman and Wellpoint knew nothing about the fraudulent transactions in which they were forced to participate,” Assistant U.S. Attorney Angelo E. Onofri said in a statement. “Instead, she used her positions as a senior executive to participate in the scheme to defraud shareholders.”

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